Friday, August 16, 2013
All the pieces are in place for a major uptrend in gold
On its 1-year chart we can see that gold had already broken out of its steep downtrend in mid-July, since which time it has been held in check by its falling 50-day moving average, which is now starting to flatten out, so that a bull Flag appears to have formed as the price retreated back along the top of the trendline that it had earlier broken above.
This Flag implies another upleg, which appears to have started this morning, and this uptrend could really gain traction soon if the price breaks above the nearby resistance shown, given the huge speculative short positions that have built up and the consequent potential for massive short covering. The gap between the 50 and 200-day moving averages provides a measure of how oversold gold is. Of course, breaking above the strong resistance at the earlier major support in the $1550 area that failed back in the Spring will be a tough nut to crack, but we will have to see how gold shapes up approaching it, in order to assess the chances of an early breakout above this key level. Read more >>